Political Web sites may not survive beyond campaigns

Despite the wealth of information they offer, many political portals lack sustainable business models to carry them beyond the November presidential election, analysts say.

3 January 200211:43 am AEDT

A little less than a year ago, 25-year-old Charlie Rentschler quit his steel mill job in Ohio, emptied his savings account, and set out on his dream to build a political information Web site.

He joined his older brother in San Francisco, and together they slowly raised $500,000 from a collection of private investors who donated small amounts of
cash at a time. The effort seemed to pay off when in February, Rentschler's
BetterVote.com was finally born.

But the celebration was short-lived.

Within weeks, it was clear the young company couldn't draw enough visitors to grab the attention of Silicon Valley venture capitalists. Advertising dollars never came through, and the original seed money was vanishing quickly. The Rentschlers soon found themselves scrambling for a survival plan.

"When we started out, we made a couple of assumptions that turned out not to be true," Charlie Rentschler said. "What we found was that political portals like ours could not survive on their own."

Analysts, professors and other experts agree that the Web is a gold mine for political information, offering coverage that goes far beyond what's available in newspapers and on television. New sites seem to pop up every few weeks, with some boldly proclaiming that their emergence will revolutionize democracy; they hope to stir apathetic Americans into voting, writing to lawmakers, and getting more involved in the political process.

But many of these political portals lack sustainable business models to carry them beyond the November presidential election, analysts say. The information, solid as it may be, is generally free, and advertising dollars aren't flowing in because traffic figures are low.

As a result, some analysts predict that e-government sites will suffer the same fate as the medical and health information services that flourished when they launched but fizzled by the end of last year.

Take Drkoop.com. In March, the Austin, Texas-based company filed regulatory documents raising substantial doubt about its viability because of a shortfall in advertising revenues combined with a spike in expenditures.

Political portals could be headed in the same direction.

"Overall, I'm deeply skeptical about the viability of these political Web sites," said Jay Stanley, an analyst at market research firm Forrester Research in Cambridge, Mass. "Americans in general don't enjoy politics, and those who do have such information overload it leaves one wondering exactly what value these sites bring."

To offset these concerns, some of the political sites, which claim neutrality on candidates and issues, are trying to provide services beyond election news.

Grassroots.com, which launched Feb. 15, helps voters take action on issues instead of focusing on elections and candidates. Backed by $30 million in venture funding, the site has enlisted support from former Clinton press secretary Mike Murray and former Bush adviser and New Hampshire governor John Sununu. It also is affiliated with the League of Women Voters.

Arvind Rajan, president of business development for Grassroots, said revenues come not only from advertising but also through services that help candidates with cybercampaigns.

Vote.com, meanwhile, registers the public's opinion on hot topics: Should Elian Gonzales go back to Cuba with his father? Should Vermont sanction gay marriages? The results are then forwarded to lawmakers.

Founded by pollster and former top Clinton campaign strategist Dick Morris, the site claims to have a solid revenue plan that focuses on contracting polling services to other businesses. A deal is already in place with a large, undisclosed market research company, Morris said. What's more, Vote.com is the only political portal that appears on Media Metrix's radar, drawing 50,000 to 100,000 unique visitors a day.

"Most of the other sites are going to drop dead next year," Morris said. "But not us."

GovWorks.com is another company looking to stay afloat beyond November. Founded in 1998, the site also offers election information, but its key mission is to bring government services to consumers; it allows visitors to easily pay parking tickets or water bills, for example.

Charlie Rentschler believed that he, too, offered a unique service at BetterVote.com. He came up with the idea of using a poll-taking exercise to match confused voters with candidates that best suited their political beliefs.

Although the site generated a loyal following, Rentschler soon discovered that not enough people were visiting his site.

"We found that Americans are pretty darn apathetic," he said. "People have never been interested in sifting through piles of information."

The Rentschler brothers didn't give up. Instead, they tweaked their business model to include a service that would allow voters to donate to candidate campaigns--a move that the brothers said made the company attractive enough for a buyout offer. They would not disclose further details, however.

"We always knew that we would either have to attract a million visitors to get VCs excited, or we were going to have to fold ourselves into a public company," Rentschler said. "What we learned is you'd have to be a fool to pin your hopes on political portals."